Postal strike looms as Royal Mail talks break down

The Communication Workers Union is expected to take a step closer to its biggest confrontation with Royal Mail in a decade by calling a ballot on industrial action later today which could lead to the first national postal strike since 1996.

The union is at loggerheads with Royal Mail over its decision to impose a 2.9% pay deal, which it had rejected.

The CWE is also concerned about the possibility of big job losses, increases in part-time working and Royal Mail's plans to offer up to 20% of the shares in the company to workers - a move the CWU regards as backdoor privatisation.

Talks between the two sides are understood to have broken down at the end of last week despite a new offer from Royal Mail. The deal is understood to have been for an extra 1% increase - funded from savings from improved productivity.

The union's postal executive will meet today to discuss the next step in the light of the CWU's annual conference decision last month to seek a mandate for action up to, and including, strike action, if progress was not made over the subsequent four weeks. That deadline has passed, and a ballot looks likely. "Given the latest rejection it does not leave them much option," said one source yesterday.

Though the last national stoppage was in 1996, the two sides went to the brink over pay three years ago. Then workers voted narrowly against industrial action.

The looming confrontation with the CWU comes at a difficult time. Royal Mail is facing increased competition following the full liberalisation of the letters market at the beginning of the year; needs heavy investment to automate sorting operations, and is saddled with a huge pension deficit.

Although Royal Mail has reached agreements with the industry regulator, Postcomm, on pricing, and with the government over investment in the business, executives remain conscious that the market will become increasingly competitive.

A Royal Mail spokesman said: "We have invited all the front line reps and managers to meet this week to go through these challenges and talk about how we can face up to them together."